State Bar of South Dakota

Ethics Opinion 88-4

Subject: Fee Splitting; Conflicts of Interest.

Summary: An attorney cannot split a fee with a non-lawyer for legal
work performed by the lawyer for a mutual client. Such a relationship creates a conflict
of interest unless waived by the client.

FACTS

Your partner has been contacted by a financial services company who wants
to sell wills to its clients. Once the client bites, the company sends a form to the
client which is filled out and returned to the company. The company then sends the filled
out questionnaire to the attorney who does the will. The attorney and the financial
company split the fee. You inquire as to whether this Committee believes such conduct is
ethical.

Presumably, customers will be told that the will shall be prepared by an
attorney selected by the company. There is no indication that the customer ever meets the
attorney and might well not even know his or her name.

OPINION

In our opinion, the proposed practice violates the standards of
professional responsibility as follows:

There is no question the attorney is involved in the practice of law as
legal instruments are being prepared. The compensation received by the attorney is a legal
fee which cannot be shared with a non-lawyer. (DR 3-102(a) and Model Rule 5.4)
Additionally, while it does not appear the relationship between the attorney and the
company is a partnership, the spirit of DR 3-103(a) is also violated. You might also see
Model Rule 1.5 and 7.2(c)

The proposed agreement also appears to raise some questions about a
conflict of interest or divided loyalty. DR 5-102, 105, DR 7-101 and Model Rule 1.7. This
is as the services are provided to the company and the compensation is received from the
company, however, the work is performed for the benefit of the client. If the client did
consent after full disclosure this conflict might well be waived, however, that is not
indicated from the facts presented.

Additionally, since the factual information is provided to the attorney
through the company, a question may be raised whether there is a violation of confidential
communications between the client and the attorney.

Hence, the Committee believes that the practice proposed would not be
acceptable.